Daily Brief Event-Driven: ANZ’s Equity Raise Successful and more

• ANZ got about half its equity raise done, with the shortfall bookbuild only being 5% of the institutional total and clearing above TERP. Now the retail rights.
• Risk management mechanisms suggest rights trade expensive to stock near-term, then cheapen, as ANZ shares experience some selling pressure from arbs.
• But ANZ is cheap. Relative weakness on FY2-FY3 EPS forecasts has contributed to 25% underperformance vs Peers since January but Relative Multiple Deterioration has contributed more.

• Link Administration (LNK AU) announced it has agreed to Dye & Durham’s latest $4.81/share offer, which is 13% below its initial $5.50/share approach last December.
• Link shareholders may also receive an additional A$0.13 from the sale of the Banking and Credit Management (BCM) business under the latest offer.
• This transaction is still subject to Australian Competition and Consumer Commission clearance, which should happen once D&D undertakes to offload its GlobalX ops.

• Overnight we got news that the EU had cleared the purchase of Hitachi Transport System (9086 JP) by the KKR bidco.
• What started as an expected five-month process to gain regulatory clearances should now be down to two months. Risk arb is trading wide, but this is an “easy” deal.
• Now trading at 10% annualised to the cash-out date implied by a 30-Sep start date, this is a “good risk.”

• Emperador (EMI SP) started trading on the SGX (SGX SP) on 14 July and so far meets all criteria to be included to the FTSE Straits Times Index (STI INDEX).
• However, it is still a borderline inclusion on free float, market cap and liquidity and will need to pass all three criteria to be added to the index in September.
• If added to the STI, the inclusion will take place on the same day as the potential inclusion of Emperador (EMP PM) in the FTSE All-World Index.

• Life Insurance Corp of India (LIC) (LICI IN) and Tata Power (TPWR IN) will replace Nmdc Ltd (NMDC IN) and Piramal Enterprises (PIEL IN) at the close on 5 August.
• In September, Adani Wilmar (AWLTD IN), Indian Railway Catering and Tourism (IRCTC IN), Bharat Electronics (BHE IN), Hindustan Aeronautics Ltd (HNAL IN) and Mphasis Ltd (MPHL IN) are potential inclusions.
• At over 4 days of deliverable volume to trade, the impact is especially large on  Bharat Electronics (BHE IN), Zydus Lifesciences Ltd (ZYDUSLIF IN) and Lupin Ltd (LPC IN). 

• Link Administration (LNK AU) has entered a revised scheme implementation deed with Dye&Durham/DND at A$4.81 per share. The scheme meeting will be held in mid-August.
• Shareholders will be supportive due to deal fatigue, and the offer price is 11% above the undisturbed price and at the low end of the original IE valuation range.
• Regulatory approvals are a key risk. DND is presumably confident in its undertakings to gain ACCC approval. At last close, the gross spread is 7.8%.

• Kotak Mahindra Bank (KMB) was deleted from the FTSE All-World Index following the introduction of the minimum headroom rule. With foreign room below 20%, the stock was not added back.
• The latest shareholding pattern as of 30 June shows foreign room at 20.01%. This means that Kotak Mahindra Bank (KMB IN) should be added to the index in September.
• However, the inclusion will take place in a staggered manner. Subject to foreign room staying above 20%, the inflows will come over the next couple of years.

• On 30 June 2022, Sanrio reached a five year licensing deal with Alifish, which will cover Sanrio’s cast of popular characters including Hello Kitty and Kuromi in China.
• In July 2020, Shintaro Tsuji (founder of the company) handed over control of Sanrio to his 31 year old (as of 2020) grandson Tomokuni Tsuji.
• Despite the longevity of Hello Kitty as well as the recent partnership with Alifish (Alibaba’s subsidiary) to expand its business in China, we remain concerned with Sanrio’s lofty valuation multiples.

For our next Webinar, we are delighted to welcome back Analyst Jesus Rodriguez Aguilar who will take us through his top ideas in Europe’s M&A landscape.

• On 3rd June, Fraser & Neave (FNH MK) announced it sought to take Cocoaland (COLA MK) private by way of a Scheme at RM1.50/share, a 26.1% premium to last close.
• Board support was received on the 15 June. The Explanatory Statement is now out with a Court Meeting to vote on the Scheme to be held on the 18th August. 
• Management-Backed Leverage Success, the largest shareholder with 40.65%, has given an irrevocable to vote for the Scheme. This is done with payment late-October. The IFA says fair and reasonable.